Introduction
In this special story on ‘Survey’, being a part of the powers of the Income-tax Authorities for investigation and collection of information, this article covers the powers to collect information u/ss 133(6) and 133B. Though these powers are exactly in the nature of survey, they are akin to the powers of survey.
 

Power to call for information – Section 133(6)

1. Section 133(6) of the Act inter alia provides as follows –
   133 The Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals) may, for the purposes of this Act,

   "(6) require any person, including a banking company or any officer thereof, to furnish information in relation to such points or matters, or to furnish statements of accounts and affairs verified in the matter specified by the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), giving information in relation to such points or matters as, in the opinion of the Assessing Officer, the Deputy Commissioner (Appeals), the Joint Commissioner or the Commissioner (Appeals), will be useful for, or relevant to, any inquiry or proceedings under this Act:

   Provided that the powers referred to in clause (6) may also be exercised by the Director – General, the Chief Commissioner, the Director and the Commissioner:

   Provided further that the power in respect of an inquiry, in a case where no proceedings is pending, shall not be exercised by any income-tax authority below the rank of Director or Commissioner without the prior approval of the Director or, as the case may be, the Commissioner."

2. Finance Act, 1995
   The Finance Act, 1995 amended (w.e.f. 1-7-1995) section 133(6) by inserting the words ‘inquiry or’ after the words ‘will be useful for, or relevant to, any’. Further, a second proviso was inserted after the first proviso to section 133(6).

   Under section 133(6), as it stood up to 30-6-1995 prior to its amendment by the Finance Act, 1995, the prescribed authorities had the power to call for any information from any person which would be useful for or relevant to any proceedings under the Act. The amendment (w.e.f. 1-7-1995) empowered the prescribed authorities to call for information for the purpose of any inquiry under this Act even in cases where no proceeding is pending. However, an Income-tax authority below the rank of Director or Commissioner can exercise the said power in respect of an inquiry, only with the prior approval of the Director or, as the case may be, the Commissioner.

3. The scope and effect of the above amendments made by the Finance Act, 1995, were also elaborated in the departmental circular No. 717 dated 14th August, 1995:–

   "Power to call for information when no proceeding is pending.

   41.2 At present the provisions of sub-section (6) of section 133 empower the Income-tax authorities to call for information which is useful for, or relevant to, any proceeding under the Act which means that these provisions can be invoked only in cases where the proceedings are pending and not otherwise. This acts as a limitation or a restraint on the capability of the Department to tackle evasion effectively. It is, therefore, thought necessary to have the power to gather information which after proper enquiry, will result in initiation of proceedings under the Act.

   41.3 With a view to having a clear legal sanction, the existing provisions to call for information have been amended. Now the Income-tax authorities have been empowered to requisition information which will be useful for or relevant to any enquiry or proceedings under the Income-tax Act in the case of any person. The Assessing Officer would, however, continue to have the power to requisition information in specific cases in respect of which any proceeding is pending as at present. However, an Income-tax authority below the rank of Director or Commissioner can exercise this power in respect of an inquiry in a case where no proceeding is pending, only with the prior approval of the Director or the Commissioner."

4. Information from any person including banks –
   Section 133(6) requires any person, including a banking company or any officer thereof, to furnish information and/or statements of account, etc., to the authority concerned, if a demand is made in respect thereof by such authority. Failure to furnish an information or statement of account required under section 133 entails penalty under section 272A(2)(c).

5. Position prior to amendment
   From a perusal of section 133(6), prior to its amendment (w.e.f. –1-7-1995) by the Finance Act, 1995, it is clear that the information which could be asked for, under that section, was such as in the opinion of the concerned officer would be useful for or relevant to any proceeding under the 1961 Act. In the absence of any such proceeding, the officer could not ask for any information. The power to seek information was dependent on its being useful for or relevant to a proceeding. Therefore, the reference to ‘any proceeding under this Act’ was clearly a reference to a proceeding which was in existence at the material time.

   1. Bombay High Court in the case of D.B.S. Financial Services Pvt. Ltd. vs. Smt. M. George, Second ITO, 1994 – 207 ITR 1077 (Bom).
      It was held that the power under section 133(6) had to be exercised with reference to proceeding which is in existence. This power cannot be exercised to gather information on the basis of which the officer concerned may decide whether or not to institute a proceeding.

   2. Grindlays Bank Ltd. vs. ITO [(1998) 231 ITR 612, 614-615 (Cal), reversing Grindlays Bank Ltd. vs. ITO (1990) 183 ITR 62 (Cal) and following Bombay decision: (1994) 207 ITR 1077 (Bom)]
      It was held that notices issued under section 133(6) to the appellant-petitioner were liable to be quashed because there was no proceeding pending at the time of issuance of such notices.

   3. Daulatram vs. ITO (1990) 181 ITR 119, 137 (AP)
      A careful consideration of the provisions enacted in section 133 makes it manifest that the information which is contemplated by this section is only with reference to either the assessee or any person concerned with the assessee and not to any authority or person belonging to the revenue. The question of obtaining any information from the Superintending Engineer, the District Valuation Officer, on second reference, cannot be said to be a person from whom information is sought to be obtained.

6. Position after the amendment
   As a result of the amendment (w.e.f. 1-7-1995) of section 133(6) by the Finance Act, 1995, the prescribed authorities have power to call for any information from any person for the purpose of any inquiry under the 1961 Act even in cases where no proceeding is pending. However, as provided in the second proviso to section 133(6) by the Finance Act, (inserted w.e.f. 1-7-1995) the power in respect of an inquiry, in a case where no proceeding is pending, shall not be exercised by any Income-tax authority below the rank of Director or Commissioner without the prior approval of the Director or, as the case may be, the Commissioner.

   From the above, it is clear that even on or after 1-7-1995 the Assessing Officer has, ordinarily, no power to issue notice for any information to any person when the proceeding is not pending [Grindlays Bank Ltd. vs. ITO, (1998) 231 ITR 612, 614-15 (Cal)]. However, the Assessing Officer can issue notice, on or after 1-7-1995, for any information to any person after obtaining prior approval of the Director or the Commissioner even when no proceeding is pending against such person.

   Karnataka Bank Ltd. vs. Secretary, Government of India (2002) 255 ITR 508/123 Taxman 219 (SC).

   The Supreme Court has held that it is clear from the mere reading of section 133 that it is not necessary that any inquiry should have commenced with the issuance of notice or otherwise before section 133(6) could have been invoked. It is with the view to collect information that power is given under section 133(6) to issue notice, inter alia, requiring a banking company to furnish information in respect of such cases or matters as may be useful or relevant. The second proviso makes it clear that such information can be sought for even when no proceeding under the Act is pending, the only safeguard being that before this power can be invoked, the approval of the Director or the Commissioner, as the case may be, has to be obtained.

   Subsequently the Karnataka High Court in the case of Rechery Service Co-operative Bank Ltd. vs. CIT (2003) 129 Taxman 335 (Ker.) following the Supreme Court decision referred to above has held that where no proceeding is pending, the power in respect of an inquiry cannot be exercised by any authority below the rank of Director/Commissioner without prior approval of Director/Commissioner .
    

1. Section 133B reads as under

   1. "Notwithstanding anything contained in any other provision of this Act, an Income-tax authority may, for the purpose of collecting any information which may be useful for, or relevant to, the purposes of this Act, enter –

      1. any building or place within the limits, of the area assigned to such authority, or

      2. any building or place occupied by any person in respect of whom he exercises jurisdiction,

      at which a business or profession is carried on, whether such place be the principal place or not of such business or profession, and require any proprietor, employee or any other person whom may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession to furnish such information as may be prescribed.

   2. An Income-tax authority may enter any place of business or profession referred to in sub-section (1) only during the hours at which such place is open for the conduct of business or profession.

   3. For the removal of doubts, it is hereby declared that an Income-tax authority acting under this section shall, on no account, remove or cause to be removed from the building or place wherein he has entered, any books of account or other documents or any cash, stock or other valuable article or thing. Explanation – In this section, "income-tax authority" means a Joint Commissioner an Assistant Director, Deputy Director or an Assessing Officer and includes an Inspector of Income-tax who has been authorised by the Assessing Officer to exercise the powers conferred under this section in relation to the area in respect of which the Assessing Officer exercises jurisdiction or part thereof."

2. Scope and effect
   Section 133B, relating to power to collect certain information, was been inserted by the Finance Act, 1986 (23 of 1986), with effect from 13th May, 1986. The scope and effect of section 133B have been elaborated in the following portion of the departmental circular No. 461, dated 9th July, 1986, as under:–

   "(xvii) Extension of power of survey –

   35.1 It was announced in the long-term fiscal policy (paras 4.4 and 4.5) that an important objective of the said policy must be to ensure that income-tax makes a larger contribution to revenue and that the decline in the share of direct taxes has to be reserved. This is possible only if the tax base is broadened so that the number of tax-payers increases automatically with the growth of the economy. In order to achieve this objective, the Department has necessarily to obtain information about the incomes of such people who are liable to tax but are not filing their returns of income. Information is also needed for detection of evasion of taxes in respect of tax-payers who are filing returns of income. For this purpose, the Department has quite often to launch, door-to-door survey in specified business localities in order to identify persons who are earning taxable income but are not filing any return of income. Hence, by insertion of a new section 133B in the Income-tax Act, an income-tax authority has been authorised to enter any business premises for obtaining such information as may be prescribed. Further, at present, under section 133A(1) of the Income-tax Act, an Inspector of Income-tax to get separate authorisation from an I.T.O. with respect to each place or business premises to be surveyed. This generates tremendous workload and results in delaying the survey operations. In order to overcome this difficulty, an I.T.O. has been empowered under the new section to authorise an Inspector of Income-tax with respect to a specified locality. The power of the Income-tax authorities to collect the prescribed information has been restricted to business premises only for the present. The prescribed information will relate, inter alia, to the source of income of the occupant of a business premises, the nature of business/profession, the details regarding the account books, bank accounts and stock-in-trade, etc.

   35.2 The new section 272AA provides for penalty extending up to Rs. 1,000 for failure to comply with the provisions of section 133B.

   35.3 These provisions are effective from 13th May, 1986."

3. Relevant rule and form
   Rule 112E, effective from 9-7-1986, prescribes that the information required to be furnished under section 133B(1) shall be in Form No. 45D.